Benefits of Data Center Outsourcing

by | May 25, 2022

Any business leader involved in the maintenance and ongoing management of a data center sooner or later faces the ultimate question: do you continue to host your data center solutions internally or do you outsource? Getting the right answer for your organization means assessing the training of your IT staff, compliance requirements, security, maintenance requirements, and future needs. For a lot of IT managers, there is often some reluctance about ‘turning over’ control of the data center and using a colocation center instead. Many may feel a lack of control or have concerns about the impact of potential downtime by relying on a colocation provider.

The good news, however, is that quality colocation services are available that make outsourcing data center needs a lot less scary—with SLAs available to accommodate uptime, connectivity, and compliance requirements for nearly every business. Today’s data center outsourcing agreements generally include the day-to-day management responsibility for operating server or hosting platforms for business customers, including distributed servers and storage. Many colocation partners also provide a combination of professional services, product support, and ongoing management of computing and storage resources. With millions of data center square feet across the country, there’s no shortage of colocation providers or facilities available. Let’s take a look at the main benefits of outsourcing your data center.

Save money by shifting away from capital expenses

The global data center market size is expected to reach $10.77 billion by 2025, expanding at a CAGR of 6.9% from 2019 to 2025 according to Grand View Research. The primary drivers for growth are a shift towards hyper-scale and colocation data centers.1 Part of the reason for the tremendous increase in outsourcing data center responsibilities is that it saves money and shifts capital expenses – buildings, power, cooling, and equipment – to an operational expense. Studies show it costs about $15 million to construct a 10,000-square-foot, 1-megawatt data center. Its estimated power, the operating and capital expenditures to run and maintain the data center systems can add another $10-$15 million over the span of 10 years.

Free up resources and do more

By outsourcing data center systems and responsibilities, a data center provider will help absorb some of these costs—leaving additional spending and resources for other strategic IT initiatives.2 A company’s technology team can focus on supporting company objectives and staying ahead of the competition with technology vs time and resources managing an on-prem data center.

Access to state-of-the-art infrastructure

One of the biggest benefits to outsourcing data center services is that organizations get access to state-of-the-art servers, networking equipment, and storage solutions, sharing costs among other colocation customers. This arrangement eliminates the need for hardware and software refreshes as well as the significant additional investment needed to keep up with data center demands. Besides always having updated equipment, colocation facilities also share the cost of power.

Ensure continuity and availability

Uninterrupted Power Supply (UPS) is the backbone of data centers because they allow for the smooth working of servers and other networking devices. Top-tier data centers use smart UPS systems, battery monitoring devices, and intelligent Power Distribution Systems (PDU) to reduce the PUE ratio. Large-scale data center operators typically consume 100 to 200 watts per square foot of space, which enables them to negotiate more favorable rates with public utilities than individual companies can arrange themselves. Analysts report that in a data center hub market, power can cost 40% to 60% less than the national average.3

Decrease risk of downtime

As any data center manager knows, the cost of downtime is extremely high, and it’s continuing to skyrocket. Every minute counts – the cost of one hour of critical outages averages between $301,000 and $400,000.4 By outsourcing data center operations, organizations can decrease the risk of expensive and unexpected downtime. Businesses also have a range of options when it comes to the guaranteed availability and uptime of their colocation services. Options start with a Tier 1 facility with expected availability of 99.671%, spanning to tier 4 fault-tolerant site infrastructure that delivers expected availability of 99.995%.

Immediate access

For growing organizations, waiting for the design and construction of additional data center space may not be an option. Instead of waiting for one or even two years for data center space, today’s colocation operators can provide an inventory of space and power, and deliver flexibility for expansion and a scalable growth platform.

Making Your Move

As your organization faces the decision to expand internally or to outsource data center needs, it’s important to take a serious look at your options based on individual business needs. By looking at cost vs. benefits, organizations can determine if a colocation facility is best suited to deliver system uptime and connectivity, while also supporting future growth. Getting it right can leave your organization to focus on other big-picture strategic objectives.

1 (Source: Grand View Research), 2 (Source: Ongoing Operations), 3 (Source: Grand View Research), 4 (Source: 2020 Statista)

Learn more about UPSTACK’s data center and colocation expertise or connect with an advisor for guidance.